Note 18—Income Taxes

The components of income before income taxes are as follows:

Components of Income Before Income Taxes 

Significant components of the Company’s deferred income tax assets consist of the following:

Significant Components of Deferred Income Taxes 

The (provision for) benefit from income taxes consist of the following:

Schedule of (Provision for) Benefits from Income Taxes 

The differences between income taxes expected at the U.S. federal statutory income tax rate and income taxes provided are as follows:

Schedule of Differences Between Income Taxes Expected Federal Statutory Income Taxes 

The Company’s cumulative undistributed foreign earnings are included in retained earnings in the Company’s consolidated balance sheets and consisted of approximately $304 million at July 31, 2025. The Company has concluded that the earnings remain permanently reinvested.

At July 31, 2025, the Company had no U.S. federal net operating loss carryforwards. The Company has foreign net operating loss carryforwards of approximately $71 million, of which approximately $62 million does not expire, and approximately $9 million expires in two to ten years. These foreign loss carryforwards are available to offset future taxable income in the countries in which the losses were incurred.

In fiscal 2024, the Company had an IRC Section 382 study conducted on the reacquisition and the limitation was adjusted to $9.0 million per year. The Company recorded a tax benefit related to the adjusted amount of $23.6 million in fiscal 2024. The net operating loss carryforwards do not include any excess benefits related to stock options or restricted stock.

The change in the valuation allowance is as follows:

Summary of Changes in Valuation Allowance 

In fiscal 2025, the Company decreased the valuation allowance by $3.4 million due to profitability in the United Kingdom, offset by $4.7 million of additions in other jurisdictions.

In fiscal 2024, the Company increased the valuation allowance by $3.0 million, which included the establishment of a valuation allowance of $3.5 million for deferred income tax assets that were not more likely than not going to be utilized prior to expiration, net of a decrease of $0.2 million due to the utilization or disposal of previously valued deferred income tax assets and a release of $0.3 million for profitability in the United Kingdom.

In fiscal 2023, the Company decreased the valuation allowance by $1.0 million, which included a decrease of $2.8 million due to the utilization or disposal of previously valued deferred income tax assets and a release of $0.7 million for profitability in the United Kingdom, net of an establishment of $2.5 million for deferred income tax assets that were not more likely than not going to be utilized prior to expiration.

At July 31, 2025 and 2024, the Company did not have any unrecognized income tax benefits. There were no changes in the balance of unrecognized income tax benefits in fiscal 2025, fiscal 2024, and fiscal 2023. At July 31, 2025, the Company did not expect any changes in unrecognized income tax benefits during the next twelve months. In fiscal 2025, fiscal 2024, and fiscal 2023, the Company did not record any interest and penalties on income taxes. At July 31, 2025 and 2024, there was no accrued interest included in current income taxes payable.

The Company currently remains subject to examinations of its tax returns as follows: U.S. federal tax returns for fiscal 2022 to fiscal 2025, state and local tax returns generally for fiscal 2021 to fiscal 2025, and foreign tax returns generally for fiscal 2021 to fiscal 2025.

On July 4, 2025, the “One Big Beautiful Bill Act” (OBBBA) was signed into law. This new legislation made several changes to the U.S. tax code, including the return of 100% bonus depreciation, the ability to immediately deduct domestic research and development costs, a more favorable rule for deducting interest expenses, and updates to international tax rules around GILTI and FDII. While the Company is currently evaluating the impact of the OBBBA, the Company does not expect these changes to have a significant impact on its financial statements. Any effects have been recorded in the period ended July 31, 2025.